UseFul Tips on How to Successfully Refinance Student Loans
Today more and more graduating students are leaving college with unprecedented amounts of student loan debt to repay. With a weak job market and an economic recovery only now starting to gain traction, some students are finding it increasingly difficult, if not impossible, to repay this debt. Faced with the prospect of ruining their financial record before it actually begins, many students are exploring other options.
Refinance Student Loans
Refinance student loans by either locking in a lower fixed interest rate, according to Bankrate.com, or extending the term of the loan. (Generally, student loan terms range from 10 to 30 years, depending on the amount of the loan.) The following useful tips explain how to refinance student loans the smart way.
How to Become an Informed Borrower
Before getting started, sit down with paper, pen and a calculator, and do a complete financial assessment - doing so will ensure you are making the best financial decision. Pinpoint all of your sources of income - i.e., earned income and passive income (income that once setup requires no further involvement, such as royalties), and all of your expenses - e.g., rent, auto payments and insurance. As you break down your financial situation (income versus expenses), pay close attention to how much money is entering and exiting your household each month.
You may want to purchase a current copy of your credit report; however, this step is not necessary. For a free copy of yoru credit report every 12 months from each credit reporting company, visit AnnualCreditReport.com, the only website approved by the federal government to provide free credit reports to consumers. You would want to have your credit report handy so you can see all of your student loans at once. But if you have your most current loan statements, this too will suffice. (Contact your lender directly, if you have additional questions about how much you owe and when it's due for payment.)
Keep in mind, lenders often take credit score into consideration when deciding whether to refinance student loans. The higher your credit score is (“The highest range lies in the area of 720 to 850 and is considered to be the perfect and excellent credit,” , the more influence you have on the terms of the according to CreditScoreRange.com) new loan. Having less than stellar credit should not stop you from exploring your refinance options.
Considerations to Make Before You Refinance Student Loans
Whether you are looking to receive a smaller loan payment or lengthen the term of an existing student loan, it’s important to be aware that making such changes can greatly impact your principle loan balance in the end. For example, if you extend the terms of a loan from 15 years to 20, you will receive lower monthly payments, but pay more over the life of the loan; as a loan ages, more and more interest accrues to the principle balance and the overall cost of the loan goes up.
Remember, refinancing student loans, and consolidating them into one low- interest loan, could save you big. But only if you do the legwork needed to secure the best deal. If you’re ready to get started today, refinance your student loans with Common Bond, a company that connects student and graduate borrowers with individual and institutional investors that refinance student loans.